The phrase “innovate or die” gets thrown around a lot these days, but building the capability for effective innovation takes far more than just a clever strategy or even great ideas. It requires a culture that embraces creativity, smart risking-taking, and experimentation.
Fortunately, there are plenty of opportunities to see this in action in today’s business world. In fact, one needs look no further than the thriving startup scenes in London, Berlin or San Francisco, to name just a few. But what is it about the mentality of startups that make them so effective at innovation, and why do larger organizations often struggle so much?
Leadership plays a significant role. Successful entrepreneurs tend to be natural risk takers that surround themselves with like-minded people. Their collective willingness to place lots of small bets, experiment rapidly, and pivot based on results is fundamental to survival in an environment where businesses live or die by their latest idea.
Unfortunately, the larger organizations become, the more risk averse they tend to also become. In some ways, it’s understandable. Bigger businesses depend on consistent results to pay salaries on time, please shareholders, and maintain operating margins. By contrast, innovation projects rarely come with a guarantee of success—and always carry a degree of inherent risk. On the face of it, the two don’t mix well together. As a result, senior leadership teams in growing organizations tend to pursue lower and lower risk projects over time, at the expense of genuinely innovative longer-term initiatives. Eventually, innovation is shelved altogether in favor of safe bets.
But to say that larger organizations don’t need or can’t afford to innovate would be extremely misguided—and even dangerous. Focusing exclusively on the here-and-now may preserve an organization’s present, but will eventually kill its future. After all, we live in a world where disruption is around every corner, in every industry. Failure to prepare for the future today often means there won’t be one tomorrow and this is why effective innovation is so important.
The Answer is an Innovation Funding Board
Instilling entrepreneurial behavior throughout an organization requires strong leadership, combined with an approach similar to those inherent in the startup world. There’s usually no shortage of creative thinking and potential within most organizations. What’s needed is a mechanism that will draw it out, encourage and nurture it at every level, instead of strangling it with an over emphasis on safe bets.
An Innovation Funding Board (IFB) is designed to do just that. Not only can it identify, encourage and incubate new innovation projects, but crucially, it can make independent funding decisions, setting any organization on a path towards long-term success. However, before an IFB can be implemented, there are key questions to address, functional issues to resolve, and funding discussions to be had.
This blog series introduces the concept and outlines how to successfully implement IFB within an organization. When done correctly, it can play a pivotal role in any strategy designed to foster a culture of innovation and pave the way for sustainable growth.
In my next blog in this series, I’ll look at the IFB concept in more detail, identify key questions to consider before implementation, and examine what can be learned from innovation leaders out there today.